Carmacks copper project hits speed bump

Just as it entered the last lap of its race to develop an oxide copper deposit near Carmacks, Yukon Territory, Western Copper hit a bump in the road that could prove insurmountable for the Vancouver, B.C.-based junior mining company.

In a decision released May 10, the Yukon Water Board refused to license the copper project, saying the company's proposed heap leach method for extracting the copper is unproven, not adequately explained and poses too many risks to the Yukon environment.

But Western Copper, which has faced other obstacles in moving the Carmacks Copper Project located 38 kilometers, or about 24 miles, northwest of Carmacks in central Yukon toward development, said it will not give up.

The company had planned to begin construction of an open pit mine with a six-plus year mine life next year and start production in 2012. Carmacks has 10.6 million metric tons of proven and probable copper reserves as well as significant quantities of gold and silver. At 5,000 metric tons per day, Western Copper hoped to produce 32 million pounds of copper annually from Carmacks along with most of the 165,000 ounces of gold and nearly 1.6 million ounces of silver contained in the deposit.

Project could be sold

Recently, the junior's management said it was considering selling the property, possibly to owners of the neighboring Minto Mine, as an alternative to developing it themselves. The move would allow Western Copper to focus its resources on developing its nearby Casino property, which hosts a larger deposit with copper-gold-molybdenum mineralization similar to that found at the Pebble Deposit in Southwest Alaska.

Western Copper won the Robert E. Leckie Award presented by the Government of Yukon annually for outstanding mine site reclamation efforts in 2009.

Despite a similar stellar record for environmental concerns at Carmacks, the project continues to be plagued by controversy, primarily due to its proximity to nearby creeks and rivers.

"We have the option to build (Carmacks) or sell it," Western Copper President Paul West-Sells told investors attending a Yukon Mining Alliance forum in New York April 22. "Our preference now is to sell it. We are getting advice in the next two weeks."

Part of the challenge of developing the Carmacks property is the dual nature of its deposits. The upper level of the mineralization, which Western Copper aims to develop, overlies a potentially larger sulphide deposit that could be far more costly to develop because of environmental safeguards required to prevent acid runoff from the operation.

Decision surprised developer

Ironically, Western Copper's water use license application for extracting the more benign oxide copper near the surface stumbled on similar environmental concerns.

A Yukon water license dictates how a proposed mine can use water, as well as how wastewater will be treated.

Western Copper spokeswoman Claire Derome told reporters recently that company engineers expected the water board to impose strict conditions, but they never imagined the license would be denied.

The permitting process for the project began in 1994. After many years of extensive baseline studies, the company submitted a project description and environmental assessment report in 2005. The executive committee of the Yukon Environmental and Socioeconomic Assessment Board issued a favorable report and recommendations in July 2008.

Western Copper said the YESAB committee concluded that it had provided sufficient information to allow for the identification and assessment of potential effects, that potential environmental and socioeconomic effects had been adequately assessed and that practical means had been identified to prevent or reduce to an acceptable level any potentially significant adverse effects of the project.

"Based on those conclusions, the executive committee recommended that the project be allowed to proceed, subject to terms and conditions, since it had been determined that any adverse environmental and socioeconomic effects can be mitigated by those terms and conditions," the company said May 12 in a chronology of its permitting efforts for the project.

Project won quartz mining license

The Government of Yukon accepted the YESAB committee's recommendations and the terms and conditions of mitigation measures in September 2008.

At that point, only two main regulatory requirements remained for the project's approval, a quartz mining license under the Quartz Mining Act and a water use license under the Waters Act.

Yukon's Minister of Energy, Mines and Resources issued the Quartz Mining License on April 15, 2009. It authorizes development and production of the project under section 135 of the Quartz Mining Act, including requirements for construction plans, reclamation and closure plan, financial security and environmental protection plans.

In November, the Yukon Water Board confirmed that it had completed the review of Western Copper's water use license application and deemed it adequate for public comment.

A water use license addresses issues of water use and the protection of water quality through the establishment of effluent discharge standards, water quality objectives and ongoing monitoring, as determined by the board.

During the board's public hearings, lawyers and technical consultants hired by the Little Salmon Carmacks First Nation raised numerous questions about the heap leach method that reportedly stumped Western Copper officials.

The Salmon Carmacks First Nation, the Yukon Conservation Society and other groups were especially critical of the company's claims that it would be safe to use sulfuric acid to extract copper from ore. These groups have opposed the development throughout the permitting process.

To reassure regulators, Western Copper had offered to demonstrate its heap leach technology in stages once mining at the Carmacks Copper project began.

Junior: Water Board ignored rules

After the public hearings and additional review this spring, the Water Board denied the water use license application.

In doing so,"the board did not follow or implement the findings of the environmental assessment of the YESAB Executive Committee, as reflected in the Decision Document, and did not acknowledge the provisions of the Quartz Mining License which addresses the development, operation and reclamation of the project," said Western Copper in a statement May 12.

"The board indicated disagreement with the conclusions of the YESAB Executive Committee respecting the feasibility and environmental effects of the heap leach facility and operations and the reclamation plan, including heap rinsing and neutralization. The Water Board determined that further and more detailed information would be required from the company on these issues, as well as water management issues, before a water use license would be granted," the company added.

Western Copper said it has a number of concerns about the Water Board's decision, including that the nine volumes of application materials, accepted by the board in November have now been found to require further detail and information and that the board has not followed or implemented the conclusions of the environmental assessment of YESAB and the decision document, which addressed in detail issues such as heap leaching and reclamation - and which concluded that the project should be allowed to proceed.

The company also expressed surprise that the board made no reference in its decision to the determination of the Minister of Energy, Mines and Resources to issue a quartz mining license authorizing development and operation of the mine and related facilities, and establishing terms and conditions and security for reclamation. The company had expected that the decision of the Water Board would recognize the environmental assessment, the decision document and the quartz mining license, and focus on the appropriate terms and conditions of a water use license.

Western Copper said is considering a number of responses to the denial of its water use application. Initially, it is seeking clarification and direction from the Yukon Government respecting the role and responsibility of the Water Board in the context of the environmental assessment and decision document under the Yukon Environmental and Socioeconomic Assessment Act and the quartz mining license issued under the Quartz Mining Act. The company also is reviewing the appeal provisions under the Waters Act as well as considering the information and materials required for a reapplication for a water use license.